Nils Fellow taxpayer, here is the bad news: our bet with Lloyds Banking Group – otherwise known as the asset protection scheme – is not going well. As insurer, we're on the hook if Lloyds' impairments hit £25bn and, at its current rate of disaster, the bank could be halfway there by the end of this year.

Now here's the good news: maybe it's not too late to change the terms of the insurance policy since the Treasury is still scrutinising the books. What's that? Lloyds says the terms are non-negotiable and the Treasury agrees. Oh dear.

How worried should we be? Very. Lloyds' statement yesterday spoke about a rise this year of "more than 50%" in impairments in the corporate loan book – essentially HBOS's crazy level of advances to commercial property developers and such like.

Lloyds maintains that this is consistent with February's statements. That's true – but partly because past warnings about continued "high levels" of impairment were so vague. After yesterday's statement, the HBOS loan book looks more horrible than ever. We can only hope that the Treasury's boffins, with the inside track, had a better grasp of the facts than the market. Some City analysts swore that yesterday's statement was a profits warning in all but name.

From the point of taxpayers, this position is highly unsatisfactory. We are being asked to put our faith in the Treasury's calculations with very little insight into its methodology. So whatever Lloyds and the Treasury say today, don't rule out the possibility of political pressure to revisit the terms of the asset protection scheme tomorrow. Taxpayers need to be confident that they are not being taken for mugs.

Barclays told us that its purchase of Lehman Brothers' New York operation at the end of last year was the steal of the decade, and it has a point.

Barclays Capital, the investment banking division, enjoyed a bumper January and a very decent first quarter in total, helping group profits in the first quarter to rise 15% to £1.37bn. Fixed-income markets are booming as governments start issuing small mountains of debt and BarCap finds itself sitting pretty. Competition has disappeared and there are rich pickings for the survivors. So, yes, the Lehman purchase seems to be a winner.

One suspects there was a huge slice a luck here. If Barclays had bought parts of Lehman earlier than it did (and it seemed to have the appetite for such a deal), the outcome would have turned out very differently. The same, of course, is true of its pursuit of ABN Amro in 2007. Barclays was saved on that occasion by the arrival of Sir Fred Goodwin and Royal Bank of Scotland.

Still, this mix of luck and judgment has brought Barclays to roughly where it wanted to be. Its scars of battle are still severe – a third of the bank has been sold to Middle Eastern state-backed investors on punitive terms – but it is now possible to see how Barclays can now avoid issuing more equity. It is generating capital again and the regulators are happy with the ratios. If those facts don't change, Barclays can hold the line that its balance sheet is sufficiently robust to steer the group to the other side of the recession.

What could go wrong? Plenty. The level of impairments in the UK could still explode as recession bites. Barclays is sticking to its past guidance on the level of write-downs but seems to be edging towards the upper end of the range. Meanwhile, a very large exposure to private equity loans remains. These are genuine worries and Barclays will look very silly indeed if it is eventually bounced into raising capital. But, for now, one can understand why it prefers to ride its luck.

Uneasy easing

If Lloyds gave the market a reality check about green shoots in the economy, so did the Bank of England. The decision to increase the size of its quantitative easing programme by £50bn is a signal that Threadneedle Street sees little evidence of a turnaround.

As the Bank says, the world economy "remains in deep recession", so it is hard to quibble with the thinking behind the decision. But it's also hard to ignore the fact that gilt yields are higher today than they were before quantitative easing began. Would they have been even higher if the Bank had done nothing? It's impossible to tell.

That is the problem with quantitative easing. How much is enough, and when is the right moment to reverse the policy and start worrying about inflation? It's a hard call. Just look at what's happened to the oil price: it's back at $55 a barrel and the professionals don't know why.